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Mortgage Lenders urge starter home caution

The
Council of Mortgage Lenders (CML) has warned ministers that the
administration’s Starter Homes policy risks distorting the housing market and
urged the government to set a less ambitious target.

There
should be a maximum 15 per cent requirement for Starter Homes on developments,
rather than the 20 per cent the government has proposed, CML has suggested.

Responding
to the latest consultation on the policy CML argued that 15 per cent would
“better enable a mix of affordable housing tenures to exist on sites,
especially given that DCLG analysis shows that commonly 20 per cent is the
entire affordable housing proportion on site, and therefore would constrain
other tenures”.

The
body said the government’s aim to build
200,000 Starter Homes by 2020 risked destabilising the market because they
would make up a “significant” proportion of all new build properties.

It
stated: “In the context of overall new build housing, the scheme would
represent a significant proportion of all new build, and that presents a market
distortion risk.”

CML
has called for the monitoring of the policy “to ensure that the potential
benefits intended are realised without unintended consequences and, in
particular, monitor any housing market distortion”.